Fina5632 Unit 1 Assignment 2

Term Assignment FINA5632 (Investments) - Semester 2, 2013 th Due Date: Wednesday 9 October, 2013 @ 5 pm
In Class: A hardcopy of your assignment is to be submitted in class. The hardcopy version submitted in class on 9 October will be the version which is assessed for your course mark
LMS: Submit your assignment on LMS (Moodle), by attaching your files (in Word, pdf and/or Excel formats) at the ‘Assignments’ tab on LMS (Moodle)
Weight: 20% of final grade
Format: A4-pages. Font size: 12 Arial or Times New Roman, line and a half spacing, Normal margins
(about 2.5 cm top, bottom, left and right)

Required [Total Marks: 100]
You are to do two reviews of the three companies which were assigned to you for this course. The first
review
The total cash dividends received on each dividend Pay Date, and the total franking credits which apply to each dividend payment.
2. The total market value of investor’s shares held on 28 June 2013 (which is the last trading day in June
2013, so is the same as 30 June 2013). Use the 28 June 2013 market price for the shares.
3. The total market value of the investor’s shares + cash dividends receivable at 28/06/2013 + franking credits receivable at 28/06/2013.
(a) Cash dividends receivable at 28/06/2013 only applies if the company has a dividend which has a dividend ex-date on or before 28/06/2013 which has not been paid by 28/06/2013. This does not apply to most companies, but does apply to a few such as some banks and property trusts.
(b) Franking credits receivable at 28/06/2013 applies to franking credits attached to dividends receivable at 28/06/2013 which were included in (a) above.
The total of these items is market value of the investor’s unspent investment at 30 June 2013.
4. Calculate:
a)
b)
c)
d)

e)
f)
g)
h)
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Each investor has $1 million to invest.
Their goal is to finance a lifestyle which requires at least $50,000 income (dividends + franking credits) in
30/6/2013 dollars. [This is a 5% return on $1 million.]
It will all be invested in shares in companies listed on the Australian Securities Exchange (ASX).
The maximum investment in any one company is limited to $100,000.
They do not have to invest in any of your companies, but could invest in all three. So, you will be recommending investments which might total a maximum of $300,000, or zero, or anywhere in between.
This between 0% and 30% of each investor’s portfolio.
Assume that each investor has no other investment assets other than this $1 million.
You must consider their financial information which is available from the Morningstar website
Use information up to 30 August 2013, and the closing share prices on 30 August 2013. [Note: You are allowed to use any important information which comes available after 30 August 2013, such a major announcements by the company. If you use such information you must use the closing share price on the trading day after the announcement was made. Also, if a company makes a really major